The paper contributes to the literature that aims at identifying and measuring the criteria of formation of a polycentric city. Polycentric city is closely related to the changes and development of spatial ñ functional structure of city. City planning is one side of this process, the other being closely related to choice of residential location of individuals (households) and choice of commercial location of businesses and industries. The paper aims to identify the impact of real estate investment on formation of neighbourhoods within Riga City. Like in many post ñ social economies, huge amount of new mostly residential, office and commercial development projects have been realised over past years in Riga City in land areas previously undeveloped or partly developed. This has led to a change of number of inhabitants and employees in many of neighbourhoods of Riga as a result changing social context and even ìfaceî of some of the neighbourhoods. The paper is based on real investment survey, with data on amount of real estate investment in 59 historic neighbourhoods of Riga City in past 5 years from which conclusions and some theoretical generalisations are made.